TransCanada’s new plan includes a 32-kilometre detour to avoid the environmentally fragile Sandhills region of NebraskaNati Harnik/Associated Press
TransCanada Corp. has reapplied for a U.S. permit to build the controversial Keystone XL pipeline, opening a new round of contentious debate in the midst of the presidential election campaign.
Expectations are running high in Calgary and Ottawa that, if he wins re-election in November, U.S. President Barack Obama will approve the 2,700-kilometre pipeline that would stretch from Alberta's oil sands to Houston's refinery complex.
But American environmentalists remain determined to block the project, arguing it will threaten an important aquifer and deepen the U.S. dependence on unconventional crude oil that produces high levels of greenhouse gas emissions.
TransCanada filed a new plan with the State of Nebraska two weeks ago, with a 32-kilometre detour from the original route to avoid the environmentally fragile Sandhills region, which the state government wants to protect.
The company is hoping it can get approval from the U.S. State Department and commence construction in early 2013.
TransCanada is moving more quickly to build the southern leg of the project, which does not need a cross-border permit from the State Department and will help relieve the glut of crude in the U.S. mid-continent.
"The multibillion-dollar Keystone XL pipeline project will reduce the United States' dependence on foreign oil and support job growth by putting thousands of Americans to work," TransCanada chief exeuctive office Russ Girling said in a statement Friday.
The Keystone XL pipeline is seen as an important outlet for Alberta oil sands crude that would carry it beyond saturated markets in the mid-continent of the United States to the massive Gulf Coast hub, where refineries are specially configured to process heavy oil.
Proponents say that, by easing the current glut in the landlocked U.S. market, Keystone XL would reduce the deep discount that Alberta producers are being forced to accept for their production.
The pipeline debate has figured prominently in the U.S. election campaign, with Republican challenger Mitt Romney pledging to approve the $7.6-billion (U.S.) project immediately if he wins in November.
Mr. Obama has said the review process needs to run its course before the government can make a decision, though he recently played down concerns that the pipeline would contribute to global warming by encouraging greater production in the oil sands.
The President echoed the conclusions of a U.S. Department of Energy report that said Canadian-based producers would find markets for their crude regardless of the fate of the Keystone XL pipeline, so the specific pipeline project would have little impact on emission levels.
David Goldwyn, a former international energy adviser with the State Department, said he expects the project will be approved regardless as to whether Mr. Obama or his Republican rival, Mitt Romney, wins the November election.
"Before Nebraska acted last year and decided that the route would not go through the Sandhills, I believe the administration was poised to approve it," said Mr. Goldwyn, now a Washington consultant with clients in Canada.
"And I believe that once a route is approved [by the state]and it's not running through some nesting grounds of an endangered species, that when they go through the process of looking at the environmental impacts and the national interest, that they will approve it."
The Obama administration delayed a decision on Keystone XL last November after Nebraska Governor David Heineman rejected the original route through the Sandhills. In January, the administration rejected the proposal after being forced to reach a decision prior to the new route being identified. At the time, TransCanada was invited to reapply with a revamped project.
However, the company still faces strong opposition in Nebraska, and the state will hold public information sessions on the new route starting next week, and then a public hearing once the final route had been determined.
The state review won't conclude until the end of the summer, at the earliest, said Brian McManus of the Nebraska Department of Environmental Quality.
Susan Casey-Lefkowitz, of the Natural Resources Defense Council, said TransCanada should not assume the approval is a slam dunk, or "no brainer" as Prime Minister Stephen Harper characterized the initial decision.
She said growing U.S. production – and the oversupply in the mid-continent – suggests the United States is less dependent on Canadian oil.
"The economics around oil are changing in the U.S.," Ms. Casey-Lefkowitz said. "There never was a strong need from the U.S. perspective for the Keystone XL pipeline but there is even less need than there was before."